The resource curse revisited: A Bayesian model averaging approach

K. Peren Arin, Zayed University
Elias Braunfels, Oslo

Document Type

Article

Source of Publication

Energy Economics

Publication Date

2-1-2018

Abstract

© 2018 Elsevier B.V. The evidence for the effects of oil rents on growth is mixed, a result which can be explained with model uncertainty. We address the issue using Bayesian Model Averaging techniques and an updated cross-country data set for long-term growth in the period 1970–2014, including 91 countries and 54 potential growth determinants. We do not find empirical evidence for the existence of a “natural resource curse” in our sample. On the contrary, our results suggest a robust positive effect of oil rents on long-term economic growth. We then introduce interaction terms of oil rents with potential conditions under which oil dependency can lead to sub-standard growth. The results indicate that the positive effect of oil rents may be conditional on the quality of institutions. We test the robustness of our results using a panel data set and find neither a curse nor a positive effect of oil rents on short- to medium-run growth.

ISSN

0140-9883

Publisher

Elsevier B.V.

Volume

70

First Page

170

Last Page

178

Disciplines

Business

Keywords

Bayesian model averaging, Growth, Natural resource curse, Oil

Scopus ID

85044279521

Indexed in Scopus

yes

Open Access

no

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